Survey of Commercial Property Decision Makers Reveals Opportunities
Roofing Contractor and Buildings magazines worked together to conduct another survey of building owners and their representatives to see what has changed, what has stayed the same, and what else we can learn as an industry so that we can improve even more. The survey was sent to over 1,500 professionals responsible for commercial properties. These professionals were asked about key factors influencing their purchase decisions as well as their perceptions and satisfaction with roofing manufacturers, consultants and contractors.
The essence of perceptions and beliefs among commercial property decision makers has not changed over the past few years. When making roofing decisions, they are most interested in those that can deliver quality, timeliness, safety and follow-up repair and maintenance services. They know scheduled maintenance is important. And, they have difficulty budgeting roofing effectively. All of these issues can be exploited as opportunities for the best within the roofing industry.
Who Responded?The survey was mailed in November 2004 to 1,500 readers of Buildings Magazine. Recipients were told that the survey was being done in conjunction with Roofing Contractor magazine in order to learn more and help the roofing industry be more responsive to their needs. A relatively high 12 percent responded.
The respondents are very busy people. On average, they manage about 2.5 million square feet of property, representing 116 facilities throughout the United States. (See Figures 1 and 2.) About half were facility managers, nearly one fifth each either property managers or in design construction, and about one tenth were with engineering firms. (See Fig. 3.
Annual Budgets: Their WorriesThe feedback on annual budgets is the same as the 2001 study: On the one hand, budgets create stress for decision makers; on the other hand, this situation presents a huge opportunity for the roofing industry. On average, 31 percent of all roofing-related expenses in the previous year were unbudgeted. (See Fig. 4). The data is worse when you break it out and evaluate it by how much of each segment was unbudgeted: Of the total expenses by segment, the approximate unbudgeted portions were 40 percent of the consulting services, 40 percent of repairs/maintenance and 19 percent for replacements.
Think about what this might mean. When you walk in the door to talk about roofing, how do you think they feel about the topic? They likely hate roofing. Maybe they've been yelled at by their boss for going over budget. Maybe they missed a portion of their annual bonus because of the inaccurate financial forecast. Maybe the misses affected their career progression.
Now ask yourself a question: If a significant amount of roofing expenses were unbudgeted, do you think they're likely to share this information with you? Probably not. Most people don't openly admit they've made mistakes. However, their negative attitudes may show during discussions with you.
A question to ask yourself is: Can you help?
Contractor Proposals: What's Really Important?Ask anybody serving the roofing industry how people make roofing decisions and they'll usually give one word: "price." But the key word really isn't price, it's value. Think about it, even the person buying a Mercedes Benz tries to negotiate price, but does that make them a price buyer? Of course not. In fact, price ranks way down the list. (See Fig. 5.)
We asked these decision makers what was important in selecting a roofing contractor when evaluating their proposals. Additionally, we asked if the items that they believed were important to them were even in the roofing contractor proposals they were seeing. The results were amazing: In more than a third of the proposals, much of what is very important isn't even included! That's opportunity!
The most important item to roofing decision makers in evaluating contractor proposals is that the contractor demonstrates a process to ensure a quality roof installation. Ninety-one percent of respondents stated its importance. (See Fig. 5.) It's amazing that 35 percent of them said that this was NOT typically included in the contractor proposals they see. The second most important factor (89 percent) is the contractor's commitment to performing quickly and appropriately when and if there are punch list items-yet 44 percent said that this was typically not addressed in contractor proposals. Information about the contractor's availability and required time to complete the project, were similarly important (89 percent)-but again, 32 percent of contractors don't mention this in their proposals.
Look at some of the other items that are stated as very important in decision making when choosing contractors. All too often there is little or no information about them included in contractor proposals. Decision makers want to know about 24/7 repair response abilities when the job is completed. They're interested in knowing if the key project people assigned to their property have experience with facilities of similar function and issues. They're even very interested in the contractor's safety process-which isn't surprising since they are likely being told by their legal counsel and their HR department about all of the concerns when contractors are on site.
Going Beyond the ProposalThere's more to earning business than the proposal. Companies that generally perform best are those that earn the most trust and educate best, regardless of the industry. How is our industry doing? Contractors are doing best (in the study in 2001 that wasn't the case); consultants were performing better. In general, manufacturers' scores have continued to slide.
Specifically, only 54 percent agree that they get help from contractors in the budgeting process. (See Fig 6.) Considering what we learned earlier in this research about how much is invested that is unbudgeted, isn't this an opportunity to offer service support to maintain the loyalty of existing clients and to develop new ones? Further, only 56 percent agree that contractors are effective in explaining why to use them (their "value proposition") vs. other contractors. When you consider how much different your profit might be with even slight increases in your closing rate, isn't this an area worth improving in your proposals and your presentations? Only 62 percent of your competition is suggesting cost-saving options for property and facility managers to consider. Isn't this a great area for you to differentiate yourself and demonstrate superior value? The only good news: Most (71 percent) decision makers believe there are real differences between you and your contractor competitors. Your challenge is to help them understand YOUR differences and how it benefits them.
Paradigms: Do They Have Them Right?Decision makers seem to have a good grasp of the key industry issues. (See Fig. 7.) They are suspicious when contractors or consultants focus the majority of their recommendation on one or two technologies because they understand that there are many different technologies and many different situations.
One interesting finding is that decision makers are becoming aware that a roof leak has impact beyond a structural issue-it affects the morale of people in the building. Another interesting point is that they are aware that not all manufacturer roof inspections are alike. Sixty-nine percent agree that it is important that inspections be performed by professionals, not sales people.
They also know the importance of maintenance, choosing systems that are easy to repair-not just inexpensive to install. In fact, understanding the importance of roof maintenance has increased since the survey in 2001. Forty-four percent of the time, roof maintenance is performed by internal people, 44 percent by contractors and 12 percent by roof consultants. (See Fig. 8.)
Factory Mutual-approved specifications are important, being either required or considered important by 85 percent of the respondents. (See Fig. 9.) UL fire rating specifications were either required by or considered important to 90 percent of the respondents. Some believed they must have "NDL" warranties (35 percent) and energy reflective roofs (25 percent).
Different Roof Material Preferences by Decision MakersThere were some differences in roof material preference between decision makers. See Figure 10. Property managers were much more likely to use asphaltic-based systems. Engineers are much more likely to use single-ply systems. Facility managers and roof consultants are more likely to use metal systems than their counterparts.
Differences by Facility UseThere are also significant differences in the degree that repairs and reroofing were unbudgeted, depending on the facility use. Commercial and retail properties had the worst experience with unbudgeted annual expenses with a total of 32 percent and 41 percent respectively. The most accurate budget forecasts were by industrial accounts, with only 5 percent of replacements unbudgeted and 15 percent of repairs.
Roof maintenance was performed by all sectors. However, contractors were most likely used to perform maintenance by retail (52 percent), industrial (46 percent), medical (43 percent) and commercial properties (42 percent).
Summary ThoughtsDecision makers involved in roofing are stressed. Budgeting is almost impossible for them to get right. Proposals often don't have information that they need and want. Explanations often lack the clarity that they need. There is no question that price is important. It's important to all purchasing decisions, whether it's a luxury good or a disposable item. However, price is not the most critical component to your success.
Take a few minutes to do a scorecard on your business. How much time is invested to generate a lead, whether it is for public bid or negotiated work? How much time is invested in the total preparation through submittal of your proposal? How much does that really all cost? If you add up the total real cost of all of your efforts to acquire work, what percentage of your total overhead expense is that?
Ask yourself what your close rate on public work is. Is it 5 percent? Ten percent? What if those were to increase by even 1 percent because you had a much more effective proposal? How much more profit would that generate? What is your close rate on negotiated work? Twenty percent? Thirty percent? What if that were to increase by just five more "yes" out of every hundred proposals you submitted? Do the calculation. What would be the effect on your profits? Trust me-it's huge!
Now look at the data. What would it take to improve your proposals from "good" to "great"? If you were to improve, how would that affect your close rates and your profits? If you study the data hard enough and are disciplined enough to create a world-class proposal that you can essentially replicate over and over again, I think you'll find your business growing beyond your dreams!